Petropavlovsk enters into agreement with Outotec (Finland) OY for delivery of key equipment for pressure oxidation ("POX") plant

4 May 2011

Petropavlovsk PLC ("the Company" or, together with its subsidiaries, "the Group") announces that its subsidiary, JSC Pokrovskiy Rudnik, has signed an agreement with Outotec (Finland) OY ("Outotec") for the delivery of key autoclave equipment for the future POX plant, including four 60m³ pressure leaching autoclaves.

In addition, the Group has signed a non-binding five year strategic co-operation agreement with Outotec to provide engineering consulting services in Russia, CIS and other countries.

Outotec is a leading global provider of process solutions, technologies and services for the mining and metallurgical industries.

Outotecs strong market position and technology leadership are based on knowledge and experience derived from the operations of two major mining and metals companies; Outokumpu Group, as well as the know-how of Lurgi Metallurgie GmbH (formerly Metallgesellschaft AG).

The contract follows the Groups development plan to install a POX plant at the Pokrovskiy site to process flotation concentrate from the Malomir and Pioneer mines.

The project design was developed by Outotec based on extensive metallurgical studies carried out by the Groups research and development centres, Irgiredmet and Gidrometallurgiya, and also at the Groups metallurgical test plant (based in Blagoveschensk).

The total annual POX plant capacity is estimated at c.600,000 tonnes of concentrate and the contract price is c.30 million Euro.

A contract for the supply of flotation equipment from Outotec is also expected to be signed in the near future.

Commenting on the announcement, Peter Hambro, Chairman of Petropavlovsk PLC said:

"I am delighted to report that our plans to create a POX processing hub at Pokrovskiy are progressing well.

I believe that Petropavlovsk, with our own expert research centres and PHM Engineering, working together with Outotec will be successful in establishing a world-class POX processing hub, thus giving the Group a strong competitive advantage in a new and very prospective field."

Commenting on the announcement, Pertti Korhonen, Outotecs CEO said:

"We hope to establish a long-term strategic partnership with the Petropavlovsk Group and its specialists.

We believe that together with the strong scientific and engineering base developed by Petropavlovsk and by using its unique laboratory and test plants facilities we will be able to offer sustainable technology solutions for efficient recovery of gold which will open up new prospects for the development of other gold projects in Russia and elsewhere".

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